Public Transportation Policy – Funding & Finance

To provide maximum benefits to the overall surface transportation system, federal public transportation investments should be increased to meet the systems needs as quantified by the U.S. Department of Transportation (DOT). The federal role in funding public transportation should be maintained as a “needs–based system,” providing investment in transit facilities, equipment, and service where justified.

These investments are necessary due to the complex nature of these projects and unique regulatory challenges that are often significant drivers of project cost.

ARTBA supports the use of federal revenues for long-term capital costs, including:

• Right-of-way acquisition, design, construction, project management and oversight of state and local fixed guideway systems, bus facilities and other transit stations and facilities;
• Rehabilitation and reconstruction of existing fixed guideway systems;
• Purchase of rolling stock and major rehabilitation activities that significantly extend the operational life of rolling stock, and the National Transit Cooperative Research Program.

ARTBA opposes the use of federal funding to finance general operating costs of transit systems in urbanized areas with a population over 200,000 or the general operating costs of high-speed and other intercity passenger rail systems. These costs are best funded through operating revenues or by state and local authorities and should be funded without federal subsidies.

The COVID-19 pandemic has had lasting effects on transit system ridership, which, though stabilized in some areas, is still generally below pre-pandemic levels. With federal COVID operating aid ending, ARTBA calls on state and local transit system funding partners to resume their fair share of operating costs, thereby allowing federal resources to remain focused on providing essential capital investments.

ARTBA also opposes any action or inaction by an officer or employee of the federal government that precludes obligation of expenditure of budget authority.

ARTBA urges the elimination of the eligibility for transit agencies in areas with populations above 200,000 to treat maintenance costs as capital expenditures. This practice of “capitalizing” maintenance costs dilutes the federal financial resources available for capital improvements that add transit capacity or extend service coverage and encourages deferral of system replacement and development activities.

Continuation of the Highway Trust Fund Mass Transit Account

Currently, federal funding for state and local public transportation program is provided through federal Highway Trust Fund (HTF) Mass Transit Account (HTF-MA) revenues, federal General Fund revenues, and state transportation department “flexing” of their federal highway funding, which is supported by the federal HTF’s Highway Account (HTF-HA.)

ARTBA supports continuation of the HTF’s Mass Transit Account and maintaining the current allocation of federal highway user fee revenues between the trust fund’s Highway and Mass Transit Accounts, which sets a fair modal balance. However, ARTBA urges the elimination of the current flexibility in use of federal funds between highway and mass transit programs. This practice limits the effectiveness of scarce federal capital resources.

Given the magnitude of unmet highway capital needs in every state, ARTBA believes federal investments in public transportation should only be derived from the HTF-MA and the General Fund.

Budgetary Treatment of Mass Transit Account Authorizations

Congress has supplemented existing trust fund user fee revenue with a series of general fund transfers since 2008. If and when the integrity of the HTF is restored to an exclusive user fee revenue stream, those budgetary protections should be reinstated to assure all trust fund user fee revenue is invested expeditiously to support surface transportation improvements and avoid accumulation of a trust fund balance in excess of the amount needed to meet cash flow requirements.

Innovative Financing Mechanisms

ARTBA supports the continued use federal innovative financing programs––such as Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation and Improvement Financing (RRIF) loans, State Infrastructure Bank (SIB) assistance, and tax-exempt bonds––to provide financing and credit assistance that leverage public and private resources for public transportation capital investments.

Intercity passenger rail capital improvement projects are eligible for these programs, which are designed to attract substantial non-federal investments to improve the nation’s intermodal surface transportation system.

Federal policy should be clear that loans from the TIFIA program repaid with non-federal funds will count toward a project sponsor’s non-federal share of project costs.

The cap for private activity bonds should be lifted, as demand for the program continues to outpace the cap.

Funding Security Improvements

Investments in transportation security are critical to the functionality of the nation’s public transportation network, public safety and national defense. ARTBA believes that any federal investments made to assure security on the nation’s public transportation systems should be financed exclusively through the General Fund of the U.S. Treasury and that transportation agencies should be given a strong role in determining how best to secure public transportation systems.

Federal funding of High-Speed and Intercity Passenger Rail

When initiating high speed rail or other corridor service through states or other public authorities, Amtrak and private operators should be encouraged to compete for selection as service operator on a completely level playing field. One possibility, common in Europe, would be to establish a system where qualified operators (including Amtrak), would bid on routes with the subsidy being one element of the bid package. Over time, all federal operating subsidies should be eliminated and become the responsibility of the states or public authorities with the federal government maintaining capital responsibility, as is the case with aviation and highway models.

Federal highway user fee revenues should not be utilized to provide investments under this program, except for the highway-railway crossing hazard elimination in high-speed rail corridor program.